money saving
Wealth planning used to be quite a straight-forward affair. That was until the pandemic came around. Image Credit: Gulf News Archive

Since early 2020, we have found our lives shaped by COVID-19. The unprecedented restrictions forced us to reconsider the things that truly matter, and we have all been reminded of importance and value of family and health.

These months have seen a huge increase in complexity for global families. Travel and business have been disrupted, markets shaken, and health and family raced up the priority list for the majority.

Julius Baer has commissioned a survey of more than 800 experts to shed light on the topics that families are discussing right now, from investments to govern¬ance, to learn where their concerns lie, and to explore how they make important decisions. It comes as a little surprise that health has catapulted into the Top 3 talking points of wealthy families.

We expect to see this trend continue with families and individuals placing greater focus on jurisdictions with solid healthcare systems when it comes to choosing where they spend their time. In 2020, the top three discussion topics ‘beyond investments’ for families were family wealth, family governance, and regulatory aspects.

Family wealth-related topics and family governance con¬tinue to hold the top spots, with 26 per cent and 25 per cent respectively. However, health has replaced regulatory aspects as the third most important topic, with 19 per cent citing it as the most important topic for their clients.

Cropping up in financial plans

This rise is the biggest of any of the topics and indicates that the increased focus on health has translated directly into the discussions that clients are having with their advisors. We expect to see this trend continue with families and individuals placing greater focus on jurisdictions with solid healthcare systems when it comes to choosing where they spend their time.

Solid infrastructure and public services have taken on a new importance, particu¬larly for multi-generational families, who will often have more at risk members within their ranks. The continued dominance of family governance is to be expected and we predict that this will continue to be one of the main discussion points within global families.

We are living in a time of unprecedented global wealth creation, and while this increase brings an increase in opportuni¬ties – the possibility to live in multiple locations, send your children to schools abroad, and operate your business internationally – each new opportunity adds an additional level of complexity. The best way to counter this growing complexity is with a clear framework for how the family operates.

Yet, accord¬ing to our experts they only see this type of formal¬ised governing body in roughly one in ten ultra-high-net-worth (UHNW) families. Family governance is key to ensuring the financial and personal happiness of today’s complex families, and as the focus within these families shifts towards protection, preservation, and prepar¬edness in the wake of the health crisis, we expect to see interest

Generation game

Younger generations likely have their own views on how the family money is managed. Including them more actively in the deci¬sion-making process could help families to ensure smoother transitions of wealth between generations when the time comes. Introducing younger genera¬tions to trusted family advisors could also help the next generation to learn as they grow and give them a better understanding of not only the family’s financial operations, but also their values and purpose.

Priority shift

The pandemic may not have radically changed families’ investment outlooks, but it has accelerated the growth of some trends that were already evident before last year. The main change we have seen as a result of the pandemic is that it has shifted people’s priorities. In the US, for example, many babyboomers have taken early retirement.

Not only did their portfolios per¬form very well thanks to the swift reflation of mar¬kets by the Federal Reserve, which meant their net worth by the end of 2020 had substantially increased, but also, they realised that there is more to life than work. The new focus on health and family during the pandemic, combined with the conveni¬ence of working from home, has pushed considerations such as quality of life and family time much higher up people’s lists of priorities.